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[S267]Self Employment Income Tax

by Kevin Sinclair, Kev

In the vast majority of cases, it's to escape the income trap a normal worker-boss relationship perpetuates - i.e. if you stay a "worker" then you stay in this one-to-one relationship that exists between worker and boss, where you exchange your skills and effort in return for a fixed wage every week.

The only way you can get money is to come back and do the same things all over again next week... or maybe do a little more work to get a little more pay.

This linear relationship - you work, and then get paid - fixes your income. It commits you to a life of "more of the same" week in and week out, and never really provides the extra needed to escape this cycle.

Now since the "boss" appears to be the winner here, the theory is that becoming your own boss is the first step on the road to wealth.

But is it really?

When you think of someone who is self-employed, whom do you think of?

Do you think of trades people like a plumber or mechanic? Perhaps you think of a shopkeeper or take-away shop owner?

Have these self-employed people escaped the linear income trap and put themselves on the road to wealth?

No! They are still earning a linear income, because they only make money once from each person they sell or provide a service to.

While they can maybe earn more than they could as a worker, it does come with the added costs of working longer hours, extra responsibility, and financial liability. And their income potential is still limited because they can only work for a fixed number of hours.

When seeking out self-employment opportunities, avoid those that revolve around linear income where you repeatedly do the same tasks in order to earn an income.

Instead, locate those opportunities that allow you to build residual (or passive) income.

While these do take some effort to set up initially, only a little maintenance is needed once underway to keep the income flowing in.

And what are you doing while it's earning money?

If you are smart, you are looking to find and build another opportunity to generate recurring, long-term income for you, while you sleep, when you are on holiday, or even after you've retired!

Whatever you do as a self employed person; you will have to work hard at it to make it work.

But think smarter as well...

Chase passive, residual income, and wealth is a lot easier to build.

The exercises below are designed to help you ask the “tough questions,” and quickly discover whether self-employment would be right for you or not. So, take out paper and pen – or get comfortable in front of your computer – because you're about to do some important “homework!”

If you're seriously considering the self-employment option, there are two main questions to ask yourself:

1. Is self-employment potentially right for you?

2. If so, which of the four paths to business ownership would be most appropriate for you?

Let's address both of these important questions.

In the world of work, you have two main career paths: Self-Employment and “Getting a Job.” You've probably already gone the “getting a job” route. If you're reading this article, chances are that you've found your jobs unsatisfying. So, now you're probably asking yourself, “Could self-employment be right for me?”

The following three questions will provide some direction:

1. Why are you exploring entrepreneurial alternatives at this time?

2. Rate your desire/motivation/commitment to have your own business, 1 to 10 (10 being the highest)?

3. If you could land the ideal job OR start your ideal business, which would you choose TODAY?

Focus now on the first of these three questions, because you must first understand your core motivators:

- What's your WHY? (Lifestyle, income, image/prestige, leave a legacy, control, build equity, self-expression, independence, make a difference, passionate interest, etc.??) Unless you identify and hold onto your deepest need and desire, you will not have a strong likelihood of succeeding. So, spend some time writing about your WHY!

There are Four Paths to Business Ownership:

1. Become a Consultant

2. Buy an Existing Business

3. Start a New Business

4. Buy a Franchise

Below, you will see the “unique considerations” for each of these entrepreneurial pathways. Take some time to answer all the questions in the four categories.

BECOME A CONSULTANT - UNIQUE CONSIDERATIONS

- What markets will you serve?
- What services will you offer?
- Who will be your competition?
- How will you price your services?
- How will you market and sell your services?

BUY AN EXISTING BUSINESS - UNIQUE CONSIDERATIONS

- What type of business do you want to buy?
- How do you envision your own role?
- How will you finance the purchase?
- What will you expect of the seller?

START A NEW BUSINESS - UNIQUE CONSIDERATIONS

- What markets will the business serve?
- What products or services will you offer?
- Who will be your competition?
- How will you market and sell your products or services?
- How will you finance the business?

BUY A FRANCHISE - UNIQUE CONSIDERATIONS

- What type of business do you want to be in?
- How do you envision your own role?
- What will you expect from the Franchisor?
- How will you finance the purchase?

Go back now, and review all your answers. Then address the questions below, as thoroughly as you can.

What are your “Pros and Cons” for each entrepreneurial option?

1. Become a Consultant

2. Buy an Existing Business

3. Start a New Business

4. Buy a Franchise

In reviewing this brief list of “Pros and Cons” for each of the four business options, which choice seems best for you right now? Why?

Another way to determine if self-employment could work for you is to consider your own qualifications and preferences. Many people THINK they could successfully own and manage a business – but in reality, this takes a particular kind of person with a specific set of skills. This section will help you do an honest self-assessment.

YOUR QUALIFICATIONS FOR OWNING A BUSINESS

The main categories of ability include:

- Marketing and Sales
- Financial Management
- Operations and Administration
- Human Resources
- General Management

For each category above, answer these questions:

- What results will the business require each year to become and remain successful?

- What education, training or experience do you have to indicate that you will be capable of producing desired results?

- Are you personally interested in, and willing to do, the required tasks?

- If you do not plan to lead specific parts of the business, who will manage them, and how much will you need to pay those people?

Every business has its challenges, but some of the biggest challenges of self-employment often come from “the inside.” Here are some of the most common personal issues faced by new entrepreneurs.

PREDICTABLE CHALLENGES

- Do you feel certain or doubtful about becoming self-employed?
- What are the major challenges or obstacles you will face?
- What are your biggest concerns or fears?
- What questions or issues do you still have?

There are definitely answers to your questions, and there is help to get you through the transition effectively!

Here are five more questions for you to consider:

1. Two years from now, the qualities that you want most in your work/career are:
2. Will you have those qualities in your work if you continue doing what you've been doing?
3. If not, what changes must you make in order to make these qualities a reality?
4. Could business ownership or franchising help you create these desired qualities in your work/career? How?
5. If you're still interested in business ownership, what are the next steps you will take (include approximate dates for completion):

If these exercises have made you decide that self-employment is NOT for you, that's actually a positive outcome. Think of all the time, frustration and money you'll save by not going into business! On the other hand, if the questions above have crystallized and clarified your intention to own a business, then nothing should hold you back from the great entrepreneurial adventure.

May you achieve success greater than your dreams!

Article Source : Network Card For Laptop

About Author

Both Kevin Sinclair & Ford Myers are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Kevin Sinclair has sinced written about articles on various topics from self improvement and motivation, Personal Development Plan and Ezines And Newsletters. Kevin Sinclair is the publisher and editor of Net MLM Profits, a blog dedicated to providing information and tips for network marketers to succeed online.